Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 1925

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Commissioner of Customs – Appellant
Versus
Shree Durga Trader – Respondent
Order-in-Appeal No. Kol/Cus/CCP/DC/64/2026

Advocates:
For the Appellants/Petitioners: F. Ahmed
For the Respondents: N. K. Chowdhury

Classification of imported areca nuts as roasted is determined by moisture content, with levels below 10% qualifying as roasted. Advance rulings on classification are binding on the department, and authorities must adhere to established judicial precedents regarding classification criteria to ensure consistency and legal certainty.

Headnote:(A) Customs Act, 1962 - Sections 111(d), 111(m), 112(a) and (b) - Classification of imported goods - Goods declared as roasted areca nuts - Dispute regarding classification between two tariff headings - Determination of classification based on moisture content - If moisture content is below 10%, goods to be treated as roasted areca nuts - Advance ruling obtained by importer regarding classification is binding on the department - Confiscation and penalty not sustainable when classification is upheld. (Paras 8.1, 9.1, 9.3, 9.6)

(B) Judicial Discipline - Adherence to precedents - Appellate authority must follow the ratio laid down by higher courts regarding classification parameters - Failure to follow established judicial precedents and binding advance rulings renders the adjudication order unsustainable. (Paras 3.1, 4.1, 9.5)

Facts of the case:
The importer declared the imported goods as roasted areca nuts. The department challenged this classification, alleging the goods were raw areca nuts, and initiated proceedings for re-classification, confiscation, and penalties. The importer had previously obtained an advance ruling confirming the classification under the heading for roasted areca nuts. Following multiple test reports and directions from a higher court, fresh samples were tested, which confirmed the goods as roasted based on moisture content levels.

Findings of Court:
The court found that the latest test report, conducted per judicial directions, confirmed the goods as roasted. It held that moisture content below 10% is the established criterion for classification as roasted areca nuts. The department's failure to follow the binding advance ruling and established judicial precedents was found to be legally unsustainable.

Issues: The main issues were whether the imported goods were correctly classified as roasted areca nuts and whether the confiscation and penalties imposed by the department were legally sustainable.

Ratio Decidendi: Classification of areca nuts as roasted is determined by moisture content, with levels below 10% qualifying as roasted. Advance rulings on classification are binding on the department, and appellate authorities must adhere to established judicial precedents regarding classification criteria to ensure consistency.

Result: Appeal dismissed.

Table of Content
1. summary of factual history and procedural background. (Para 1 , 2)
2. parties' contentions on classification and judicial discipline. (Para 3 , 4 , 5 , 6)
3. classification of arecanuts determined by moisture content standards. (Para 8 , 9 , 10 , 11)

FINAL ORDER NO.75618/2026 DATE OF HEARING / DECISION: 20.05.2026 Order: [PER SHRI ASHOK JINDAL]

The Revenue has filed this appeal against the impugned Order-in-Appeal No. Kol/Cus/CCP/DC/64/2026 dated 22.01.2026, passed by the Commissioner of Customs (Appeals) 3^rd Floor, Custom House, 15/1 Strand Road, Kolkata-700001 dated 22.01.2026, wherein the Ld. Commissioner (Appeals) has set aside the Order-in-Original dated 13.11.2025 and allowed the appeal filed by M/s.

Shree Durga Traders, the Respondents herein.

2. Facts leading to the case are summarized below:

(i) Roasted Arecanut having net weight of

135MT, were imported from Indonesia by the Respondent from the supplier- PT. Gajamukha. The Respondents have duly filed B/E No- 2122144 dated 13.02.24 at ICD, Durgapur.

(ii) Samples were drawn by the Officers of Customs and sent for testing to a FSSAI accredited laboratory, named EFRAC. The test report issued by EFRAC opined that the samples conforms to the standards as laid down in FSS Regulations 2011. ( ‘First test report’)

(iii) DRI, Kolkata intervened the cargo just before Customs clearance. 100% examination of the goods was done in front of DRI officers, Customs officers and importer.

(iv) Samples were again drawn by DRI officers from 05 containers and sent for testing to NFL, Kolkata. Reports from NFL, Kolkata opined that samples do not confirm to the standards as laid down in FSS Regulations 2011. The NFL, Kolkata also stated in their report that they cannot differentiate between Raw Arecanut and Roasted Arecanut as there is no such provision of distinctive parameters to differentiate between the two in FSSAI Regulations. (‘Second testing report’ dated 18.03.2024)

(v) Summons were issued by DRI, Kolkata.

Statement was recorded on 28.03.2024 and seizure memo dated 28.03.2024 was served by hand on the grounds that the impugned goods have been mis-

classified as ‘Roasted Arecanut’.

(vi) The Respondent prayed to the Commissioner of Customs for provisional release of goods vide their letter dated 09.04.2024. However, no action was taken and hence they filed a Writ Petition before the Hon’ble Calcutta High Court in WP No- 15177 of 2024. The Hon’ble High Court directed the appellant/Revenue to provisionally release the goods and complete the adjudication process within

12.08.2024.

(vii) The Customs authority did not release the goods provisionally and adjudicated the case. The Additional Commissioner of Customs passed the Order in Original No. 34/ADC/CC(P)/WB/2024-25 dated 24.10.2024, wherein he has confiscated the goods u/s 111(m) of the Customs Act 1962 and ordered for destruction of whole cargo with 100% penalty imposition.

(viii) Being aggrieved by the said order, the Respondent filed another Writ Petition before the Hon’ble Calcutta High Court being WP No. 26594 of 2024. The Hon’ble High Court vide their order dated 28.04.2025 set aside the Order in Original dated 24.10.2024 and directed the appellant to re-adjudicate the matter. Also, the Hon’ble High Court directed the appellant/Revenue to draw fresh samples to iron out all differences and send the same to FSSAI accredited laboratory; the appellant-Revenue was also directed to complete the entire adjudication process within 04 months from 28.04.2025 i.e., by 31.08.2025.

(ix) The Customs authority drew samples from the consignment lying at ICD Durgapur on 14.07.2025 and sent the same for testing to NFL, Ghaziabad. The test report dated 24.07.2025 opined that the samples are of Roasted Arecanut, conforms to the standards laid down under Regulation No- 2.3.55 of FSS Regulations 2011 (‘Third Test Report’ done through Referral lab of NFL, Ghaziabad).

(x) The adjudicating authority passed the Order-in-Original No. 96/JC/CC(P)/WB/2025-26

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2026 Supreme(Online)(CESTAT) 1925

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALAshok Jindal, Judicial Member, K. Anpazhakan, Technical MemberCommissioner of Customs – AppellantVersusShree Durga Trader – RespondentOrder-in-Appeal No. Kol/Cus/CCP/DC/64/2026

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Commissioner of Customs – Appellant
Versus
Shree Durga Trader – Respondent
Order-in-Appeal No. Kol/Cus/CCP/DC/64/2026